From Old Economics to New Economics- Radical ... - Bruce Nixon

4.3. The public and third sectors.
We have argued that institutions – broadly defined as the ‘rules of the game’ and the
organisations that ‘play the game’ – play an important part in influencing motivations and
therefore behaviour. As described above, we can see this with issues of ownership, and it is
also more generally the case in the private sector. However, these issues are just as important
in the public sphere. In the UK, for example, people are increasingly seen as passive
consumers whose ‘wants’ need to be managed and then met, rather than active citizens, much
as is the case in the private sector. Furthermore, decisions relating to public services are taken
well away from their local context, creating yet more distance between citizens and the state.
We need to regain control and to open up a public space as an inclusive environment where
people can come together, resolve their differences, and collectively decide on what they want
and how it should be delivered.
Local community control over public service priorities is one important part of this, as is the
co-production of outcomes in areas such as health and education. Just as in the private sector,
however, it is important to take a longer-term perspective, with the focus on prevention and
healthy living in the health sphere, and life-long learning and personal development in
education. The discussion of different forms of business enterprise above also relates to the
public sphere, where community groups invested with real power – i.e. not just ‘consultative
groups’ – could be constituted in ways conducive to cooperation and inclusiveness. Such a
mechanism could provide opportunities for people to engage meaningfully in civic life and
developing alternative sources of self-worth to the job market.
Although we argue that local communities should have the power to determine their priorities
in terms of public services, there is an important question on whether this could and should
extend to raising the finance to fund this. Such a process would run the risk of perpetuating
inequalities, with rich areas able to afford high quality services and vice versa. If local
fundraising were to be introduced, therefore, robust mechanisms to address this would be
needed. In a longer term sense, the economic reforms described above would be expected to
reduce inequalities over time, but this would be unlikely to address the problem over the
medium-term.
In this regard, inequalities could be further addressed by a) making the national and local tax
systems more progressive, and b) levying a windfall tax on those companies that have
benefited most from the fact that externalities have not been taken into account, and using the
proceeds to redistribute wealth, though providing long-term assets to the poor for example.
Another localising reform to support these changes would be the encouragement of different
forms of financing at the community level, in areas such as savings & loans groups for local
communities, as well as the expansion of non-monetary forms of exchange such as time
banking. Local people could therefore save together and decide on local investments together,
again facilitating the formation of trust and long-term relationships within communities.
Another very important reform would to bring planning within the ambit of the local
democratic decision-making bodies described above, to ensure that local people could control
the economic development of their community. 10
There are many things that could be done to contribute to local economic regeneration, but
one relatively straightforward mechanism that could make a big difference is public sector
10 See nef’s Clone Town Britain (2004) for a detailed analysis of the impact of our current planning
regime on the diversity and vitality of town centres in the UK, which have become increasingly
uniform and dominated by large national and international chains, at the expense of independent local
shops.
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